Demand
the amount of some good or service consumers are willing and able to purchase at each price
Price
what a buyer pays for a unit of the specific good or service
Quantity demanded
the total number of units of a good or service consumers are willing to purchase at a given price
Law of demand
keeping all other variables that affect demand constant
If price goes UP, then
quantity demanded goes DOWN
If price goes DOWN, then
quantity demanded goes UP
Demand schedule
a table that shows a range or prices for a certain good or service and the quantity demanded at each price
Demand curve
a graphic representation of relationship between price and quantity demanded of a certain good or service
Quantity is on the ___ axis
X
Price is on the ___ axis
y
Supply
the amount of some good or service a producer is willing to supply at each price
Quantity supplied
the total number of units of a good or service producers are willing to sell at a given price
If quantity supplied goes UP, then
price goes up
If quantity supplied goes DOWN
then price goes down
Supply schedule
a table that shows the quantity supplied at a range of different prices
Supply curve
contains relationship between price and quantity
Quantity is shown on the (Supply Curve)
x axis
Price is shown on the (Supply Curve)
y axis
Equilibrium
the combo of price and quantity where there is no economic pressure form surpluses or shortages
quality demanded equals
quantity supplied
Equilibrium price
price where quantity demanded is equal to quantity supplied
Equilibrium quantity
the quantity at which quantity demanded and quantity supplied are equal for a certain price
Surplus
quantity supplied exceeds the quantity demanded
Shortage
quantity demanded exceeds quantity supplied
The price below equilibrium
is excess demand
The price above equilibrium
is excess supply
Ceteris paribus
other things being equal
Shift in demand happens
when a change in some economic factr causes a different quantity to be demanded at every price
Examples of a shift in demand
income, changing taste, expectations about future, etc
Normal good
a product whose demand rises when income rises
Inferior good
product when demand falls when income rises
Substitute
a good or service that can replace another good or service
Complements
goods or services that are often used together so that consumption of one good tends to enhance consumption of another
Shift in supply
when a change in some economic factor causes a different quqantity to be supplied at every price
Inputs or factors of production
combination of labor, materials, and machinery to produce goods and services
Factors that affect supply
Nature, input prices, technology, government policies
price controls
laws that governments enact to regulate prices
price ceiling
keeps a price form rising above a certain level
price floor
keeps a price form falling below a given level
consumer surplus
the amount that individuals would have been willing to pay minus the amount that they actually payed
producer surplus
the price the producer actually received minus the price the producer would be willing to accept
total surplus =
consumer surplus + surplus
deadweight loss
the loss in social surplus that occurs when a market produes an inefficient quantity